This topic contains 8 replies, has 9 voices, and was last updated by 
CHEE KOK SENG 9 months, 2 weeks ago.
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Did you ever participated into a due diligence process? Which are aspects your experience would suggest to focus on closely?
I participated in DD on several acquisitions so far. I think it depends on the acquisition but you should focus on all aspects, especially finance/tax, legal and HR. I would recommend making sure you have as many of your questions answered before diving into integration so your integration team is not playing catch up later.
YES, COMMERCIAL ISSUE, OFF BOOK AND SELLER CHARACTER ESPECIALLY THE TOP MANAGEMNET
Yes. The aspects to concentrate on would depend largely on the main risks faced by companies in the same industry as that of the target company, and assuming you are representing the buyer’s side, whether the buyer has any specific concerns on the target company based on the buyer’s own research/talks with the seller.
Yes, all aspects are important, but I focus on the commercial side, making sure that the product is as advertised and will continue to grow per the projections. I review competitive products and IP around the product. The HR side is important as we look towards integration and how we can merge them into our business as the culture is hugely important. Finally, it is important to keep the DD moving along so that emotions and other distractions don’t derail the acquisition.
I have experience in doing DD in a target abroad. In this situation it is very important to understand which certificates, licenses, etc. the company has and which ones it should have. Also, it is important to check if these licenses can be transferred when the ownership is changed or not, in this case it is important to know how long and what do you need to get these licenses again.
For me it is the financials, knowing the financial situation of the target company is imperative when determining its value and potential future performance.
I have participated in financial vendor due diligence from the seller side. With the investment banker’s guidance and advice, we hired an accounting firm to conduct a quality of earnings (QOE) review. They obtained a complete GL dump for ten years, and examined trends in profitability and account-by-account activity, searching for anomalies and stripping out non-recurring activity, such as special legal issues and owner perqs. The financial modeling was conducted in part using the adjusted expense activity.
Financial Matters
The buyer will be concerned with all of the target company’s historical financial statements and related financial metrics, as well as the reasonableness of the target’s projections of its future performance.
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